SEC News Digest

COMMISSION ANNOUNCEMENTS

Securities and Exchange Commission Chairman Mary L. Schapiro today named Jennifer B. McHugh as Acting Director of the SEC's Division of Investment Management, replacing Andrew J. "Buddy" Donohue who is leaving the agency today after four years heading the Division.

Ms. McHugh, currently a senior advisor in the Office of the Chairman, will hold the position until a new director is appointed, at which time she will return to the Chairman's office. In her capacity as senior advisor, Ms. McHugh advises the Chairman on issues related to mutual funds and investment advisers.

"Jennifer is extremely well-versed in the operations of the Division and has extensive knowledge of the mutual fund industry," said Chairman Schapiro. "I rely upon Jennifer for her wise counsel and practical insight."

The Division of Investment Management seeks to protect investors and promotes capital formation through the oversight and regulation of the nation's multi-trillion investment management industry.

Ms. McHugh is an 11-year SEC veteran who joined the SEC as an attorney in the Division of Investment Management in 1999 to focus on mutual fund rulemaking. In 2000, she was named Special Counsel in the Office of Investment Adviser Regulation. From 2001 to 2009, Ms. McHugh served as Senior Advisor to the Director in the Division of Investment Management, advising two Directors and two Acting Directors on management and policy issues. Ms. McHugh received her law degree from Catholic University and her undergraduate degree from the University of Notre Dame. Prior to joining the SEC staff, Ms. McHugh was an associate in the Investment Management Practice Group of Dechert LLP. (Press Rel. 2010-227)

SEC Proposes Rules to Improve Oversight of Investment Advisers

The Securities and Exchange Commission today voted to propose new rules to strengthen the SEC's oversight of investment advisers and fill key gaps in the regulatory landscape.

The SEC's proposed rules would implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that, among other things:

Facilitate registration of advisers to hedge funds and other private funds with the SEC.

Implement the Dodd-Frank Act's mandate to require reporting by certain advisers that are exempt from SEC registration.

The SEC also proposed amendments to rules that would require disclosure of greater information by investment advisers and the private funds they manage, as well as amendments that would revise the Commission's pay-to-play rule.

"The enhanced information envisioned by these proposed rules would better enable both regulators and the investing public to assess the risk profile of an investment adviser and its private funds," said SEC Chairman Mary L. Schapiro.

The SEC is seeking public comment on the proposed rules for a period of 45 days following their publication in the Federal Register. (Press Rel. 2010-228; Rel. IA-3110, IA-3111)

The Securities and Exchange Commission today voted unanimously to propose new rules that would require security-based swap data repositories (SDRs) to register with the SEC. The proposed rules also lay out other requirements with which SDRs must comply.

Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act generally authorizes the SEC to regulate security-based swaps. The SEC's proposal aims to increase accountability and transparency in the security-based swap market, and ensure these repositories retain and maintain complete records of security-based swap transactions that can be accessed by regulators.

"The need for these repositories stems from the opaque nature of the swaps market - a market where transaction-level data has not been widely available or required to be recorded," said SEC Chairman Mary L. Schapiro. "These repositories have a crucial role to play in the development of a healthy and robust security-based swap market."

The SEC is seeking public comment on the proposed rules for a period of 45 days following their publication in the Federal Register. (Press Rel. 2010-229; Rel. 34-63347

SEC Proposes Rules on Security-Based Swap Reporting

The Securities and Exchange Commission today voted unanimously to propose new rules entailing how security-based swap transactions should be reported and publicly disseminated.

The rules are proposed under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which generally authorizes the SEC to regulate security-based swaps. The proposed rules (Regulation SBSR) represent an important step in the SEC's continuing effort to increase the transparency of the security-based swap market and fulfill mandates under the Dodd-Frank Act.

"This proposal lays out who must do security-based swap reporting, what information must be reported, and where and when it must be reported," said SEC Chairman Mary L. Schapiro. "These rules would provide for post-trade transparency in the security-based swap markets, and are designed to provide all market participants access to transaction information at the same time."

The SEC is seeking public comment on the proposed rules for a period of 45 days following its publication in the Federal Register. (Press Rel. 2010-230; Rel. 34-63346)

Closed Meeting - Monday, November 22, 2010 - 2:00 p.m.

The subject matter of the Closed Meeting scheduled for Monday, Nov. 22, 2010 will be: consideration of amicus participation.

At times, changes in Commission priorities require alterations in the scheduling of meeting item. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400.

Commission Revokes Registration of Securities of Elektryon for Failure to Make Required Periodic Filings

On November 19, the Commission revoked the registration of each class of registered securities of Elektryon for failure to make required periodic filings with the Commission.

Without admitting or denying the findings in the Order, except as to jurisdiction, which it admitted, Elektryon consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to Elektryon finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of Elektryon's securities pursuant to Section 12(j) of the Exchange Act. This order settled the proceedings brought against Elektryon in In the Matter of Electrosound Group, Inc., et al., Administrative Proceeding File No. 3-14092.

Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:

No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .

In the Matter of Conal C. Doyle

On November 19, the Commission issued n Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Section 8A of the Securities Act of 1933, and Sections 15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order. The Order finds that from at least March 2008, Doyle repeatedly offered to sell participation in a fictitious investment program known as the "Project Funding Platform." The program purportedly required participants to invest a minimum of $2 million and Doyle claimed that the program would yield returns of 100 percent or greater within a year with no risk to the investor. Doyle, who was not registered with the Commission in any capacity at the time of the offers, made numerous misrepresentations to potential investors in connection with the offers of the Project Funding Platform. Doyle attempted to sell the program through the use of documents and oral statements containing representations that Doyle knew, or was reckless in not knowing, were false. The Order further finds that Doyle willfully violated Sections 5(c), 17(a)(1) and 17(a)(3) of the Securities Act and Section 15(a) of the Exchange Act.

Based on the above, the Order requires Doyle to pay a civil money penalty in the amount of $25,000.00 and orders Doyle to cease and desist from committing or causing any violations and any future violations of Sections 5(c), 17(a)(1), and 17(a)(3) of the Securities Act, and Section 15(a) of the Exchange Act. The Order further bars Doyle from association with any broker or dealer. Doyle consented to the issuance of the Order without admitting or denying any of the findings. (Rels. 33-9157; 34-63345; File No. 3-14129)

INVESTMENT COMPANY ACT RELEASES

SSgA Funds Management, Inc., et al.

A notice has been issued giving interested persons until Dec. 10, 2010, to request a hearing on an application filed by SSgA Funds Management, Inc., et al. for an order to permit (a) series of certain open-end management investment companies to issue shares (Shares) that can be redeemed only in large aggregations (Creation Units); (b) secondary market transactions in Shares to occur at negotiated market prices; (c) certain series to pay redemption proceeds, under certain circumstances, more than seven days after the tender of Shares for redemption; (d) certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units; (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire Shares; and (f) certain series to perform creations and redemptions of Shares in-kind in a master-feeder structure. (Rel. IC-29499 - November 17)

Fifth Street Finance Corp., et al.

A notice has been issued giving interested persons until Dec. 13, 2010, to request a hearing on an application filed by Fifth Street Finance Corp., et al. (Fifth Street) for an order under Section 6(c) of the Investment Company Act for an exemption from Sections 18(a), 55(a), and 61(a) of the Act. The order would (1) permit Fifth Street to look to the assets of its wholly-owned subsidiaries, rather than Fifth Street's interest in the subsidiaries themselves, in determining whether Fifth Street meets certain requirements under the Act, and (2) permit Fifth Street to adhere to a modified asset coverage requirement. (Rel. IC-29500 - November 18)

ETSpreads, LLC, et al.

A notice has been issued giving interested persons until Dec. 13, 2010, to request a hearing on an application filed by ETSpreads, LLC, et al. for an order to permit (a) series of registered open-end management investment companies whose portfolios will consist of the component securities of certain domestic, global or international fixed income securities indices to issue shares that can be redeemed in large aggregations only (Creation Units); (b) secondary market transactions in shares of the series to occur at negotiated market prices; (c) certain series to pay redemption proceeds, under certain circumstances, more than seven days after the tender of shares for redemption; (d) certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units; and (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire shares of the series. (Rel. IC-29501 - November 18)

SELF-REGULATORY ORGANIZATIONS

Approval of Proposed Rule Change

The Commission granted approval of a proposed rule change submitted by NYSE Arca (SR-NYSEArca-2010-86) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to the listing and trading of shares of the Peritus High Yield ETF. Publication is expected in the Federal Register during the week of November 22. (Rel. 34-63329)

Immediate Effectiveness of Proposed Rule Changes

The Commission issued notice of filing and immediate effectiveness of proposed rule change (SR-NASDAQ-2010-148) filed by the NASDAQ Stock Market under Rule 19b-4 of the Securities Exchange Act of 1934 relating to exchange-traded notes. Publication is expected in the Federal Register during the week of November 22. (Rel. 34-63333)

The Commission issued notice of filing and immediate effectiveness of proposed rule change (SR-Phlx-2010 -159) filed by NASDAQ OMX PHLX under Rule 19b-4 of the Securities Exchange Act of 1934 relating to exchange-traded notes. Publication is expected in the Federal Register during the week of November 22. (Rel. 34-63334)

A proposed rule change filed by NYSE Amex expanding the delta hedging exemption available for equity options position limits and adopting a delta hedging exemption from certain index options position limits (SR-NYSEAmex-2010-104) has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of November 22. (Rel. 34-63337)

A proposed rule change filed by NYSE Arca expanding the delta hedging exemption available for equity options position limits and adopting a delta hedging exemption from certain index options position limits (SR-NYSEArca-2010-99) has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of November 22. (Rel. 34-63338)

Proposed Rule Changes

The Commission noticed a proposed rule change (SR-EDGA-2010-18) submitted by the EDGA Exchange pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to amend EDGA Rules 11.9(b)(1)(C) and 11.5(c)(7) regarding step-up orders. Publication is expected in the Federal Register during the week of November 22. (Rel. 34-63335)

The Commission noticed a proposed rule change (SR-EDGX-2010-17) submitted by the EDGX Exchange pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to amend EDGX Rules 11.9(b)(1)(C) and 11.5(c)(7) regarding step-up orders. Publication is expected in the Federal Register during the week of November 22. (Rel. 34-63336)

NASDAQ OMX PHLX filed a proposed rule change (SR-Phlx-2010-158) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 relating to a $5 strike price program. Publication is expected in the Federal Register during the week of November 22. (Rel. 34-63339)